The Zacks Rank Demystified: Discovering Top Consumer Discretionary Stocks to Buy

How to Build a Winning Investment Portfolio

Achieving success in investing requires both expertise and dedication, regardless of whether your approach centers on growth, value, income, or momentum strategies.

But what’s the best way to select the right mix of stocks? Meeting your financial objectives—be it retirement, funding education, or growing your savings—demands strong investment returns.

Understanding the Zacks Rank System

The Zacks Rank is a proprietary stock rating tool that helps investors identify promising stocks by analyzing changes in earnings estimates. This model evaluates four key elements: Agreement, Magnitude, Upside, and Surprise.

• Agreement: Measures how many analysts are revising their earnings forecasts in the same direction. A higher percentage of upward revisions suggests a greater chance for the stock to outperform.
• Magnitude: Looks at the size of recent changes in the consensus earnings estimates for the current and upcoming fiscal years.
• Upside: Compares Zacks’ most accurate earnings estimate with the broader consensus estimate.
• Surprise: Considers how a company’s recent earnings have compared to expectations, with positive surprises indicating potential for future outperformance.

Each factor receives a raw score, recalculated nightly, and combined to assign a Zacks Rank. Stocks are then categorized into five groups: Strong Buy, Buy, Hold, Sell, and Strong Sell.

The Influence of Institutional Investors

The Zacks Rank empowers individual investors to tap into the insights and market moves of large institutional investors.

Institutions such as mutual funds, hedge funds, and investment banks manage vast sums and can significantly impact market trends. Their investment decisions often revolve around detailed earnings models and expectations—raising earnings estimates typically leads to a higher perceived value for a company.

These investors tend to buy stocks with improving earnings outlooks and sell those with declining estimates. As a result, rising earnings expectations can drive stock prices higher, benefiting early investors.

Since institutions often take weeks or months to build positions, individual investors who act quickly on positive estimate revisions can gain an edge and potentially profit from subsequent institutional buying.

By leveraging the Zacks Rank, you can not only spot trends in earnings estimate changes but also gain access to stocks favored by professional investors.

Investing with the Zacks Rank

The Zacks Rank has a strong track record of enhancing portfolio performance. For example, a portfolio of Zacks Rank #1 (Strong Buy) stocks has outperformed the market in 26 of the past 32 years, delivering an average annual return of 23.86%.

Stocks newly upgraded to #1 (Strong Buy) often offer significant profit potential, while those downgraded to #4 (Sell) or #5 (Strong Sell) tend to underperform.

Case Study: Roku (ROKU)

Roku, the leading TV streaming platform in the U.S., Canada, and Mexico, was added to the Zacks Rank #1 list on February 11, 2026.

In the past 60 days, eight analysts have raised their earnings forecasts for Roku, pushing the Zacks Consensus Estimate up by $0.81 to $2.10 per share. The company has delivered an average earnings surprise of 97.8%.

For the current fiscal year, Roku’s earnings are projected to surge by 255.9%, with sales expected to grow by 16.3%. Over the last four weeks, Roku’s stock has climbed 3.4%, outperforming the S&P 500, which declined by 1.3%.

Key Takeaways

With a Strong Buy rating, upward momentum in earnings estimates, and robust market performance, Roku stands out as a compelling choice for investors.

To learn more about the Zacks Rank and other investment strategies, visit the Zacks Education home page.

Explore Today’s Top Stock Picks

The exclusive Zacks #1 Rank List, built on the Zacks Rank system, has more than doubled the S&P 500’s performance since 1988. Incorporating the Zacks Rank into your investment decisions could help you achieve better returns.

5 Stocks Poised to Double

Our experts have identified five stocks with the potential to gain 100% or more in the coming months:

• Stock #1: A disruptive company demonstrating impressive growth and resilience
• Stock #2: Bullish signals suggest a prime opportunity to buy the dip
• Stock #3: One of the market’s most attractive investment opportunities
• Stock #4: An industry leader in a rapidly expanding sector
• Stock #5: A modern omni-channel platform ready for a breakout

Many of these picks are still under Wall Street’s radar, offering early investors a unique advantage. While not every recommendation will be a winner, past selections have achieved gains of 171%, 209%, and 232%.